HR News and Information
 May 18, 2005

NEWS IN THE COURTS

FROM IPMA-HR HR Bulletin

For Teacher-Student Harassment, A "Clearly Unreasonable" Standard Applies
Allegedly, fourth grade teacher numerous times sexually molested his boy students. Jury's verdict for school district under Title IX was based upon judge's correct instruction that required victim to show that district acted "clearly unreasonably," despite plaintiff's argument that "the 'clearly unreasonable' standard is to be employed only in peer harassment, and that the less stringent reasonableness standard applies in teacher harassment cases." And jury's verdict for the district under sec. l983 was properly based on a "deliberate indifference" instruction, as the "deliberate indifference" analysis under the Eighth Amendment is applicable in the school context under both Title IX and sec. l983. OH 5 G __ F3d __ 11 05. Williams v. Paint Valley Local School District (6th) (3/9/05).

Pregnancy Discrimination Act Protects Employee Years After Pregnancy
Nurse resigns to have her child and much later seeks to return for a part-time position; but hospital declines to rehire her, given her former co-workers' vehement opposition to her return. She sues and is protected by the Pregnancy Discrimination Act though it has been years since her last pregnancy and she is not experiencing complications from it. "The Supreme Court has held that the PDA prohibits an employer from discriminating against a woman 'because of her capacity to become pregnant.'" However, hospital has produced evidence that "it decided not to rehire [plaintiff] because she was an unreliable employee and was avidly disliked by her peers." Not does it affect result that in her interview she was allegedly asked whether she was pregnant or intended to have more children. (3/11/04) OH 9 G__ F3d __ 11 05 Kocak v. Community Health Partners of Ohio, Inc. (6th).

For Sexual Abuse Of Program Participants, Successive Class Action Wasn't Barred
Allegedly, founder of youth part-time summer employment program funded by county sexually abused participants for decades; and victims bring class action against the county, asserting that officials were aware of the abuse but continued funding the program. Suit may proceed though prior class actions for the same conduct have failed or been settled. For the prior suits, Rule 23(e)'s notice requirement applied to putative class members as well as to certified class members, and such notice wasn't afforded those who, due to the extensive media publicity, were presumably led to believe that their rights were being adequately represented by the prior plaintiffs. KY 12 12fe 56 60c__ F3d __ 19 05 Doe v. Miller (6th) (5/5/05).

Police May Be Liable For Delay In Providing Detainee With Insulin
During booking, arrestee allegedly informs officers that she, an insulin-dependent diabetic, will need insulin that night; but the insulin is not forthcoming and she is later hospitalized for diabetic ketoacidosis. The officers lack qualified immunity, as they allegedly were aware plaintiff was past due for treatment and "arguably denied her insulin by either not seeking medical help for her or failing to transfer her to a location where she could receive treatment [.]" However, city is not liable, there being no evidence that it had a custom of denying medical treatment to pre-arraignment detainees; and state law claims fall short as well. (4/27/05) MI 1 3 53 __ F3d __ 18 05 Garretson v. City of Madison Heights (6th).

Second Internal Affairs Questioning Of Police Officer May Have Violated His Fifth Amendment Rights
Following complaints that police officers are using radio scanners to invade citizens' privacy, investigators question officer as to an alleged such occasion, assuring him that what he tells them will not be used against him in any criminal proceeding. Not believing his answers, they question him again on pain of dismissal for not answering, asserting that his Garrity (US 1967) privilege still holds; but, when he admits scanner misuse; he is terminated and convicted of falsification and obstruction of official business. The officer states Fifth Amendment claim, as "there is a genuine issue of material fact as to whether, at the time of [his] second interview, he was the target of an independent falsification and obstruction investigation, and no longer a mere Garrity witness." Nor is it a defense that the Fifth Amendment violation didn't occur until prosecutor used plaintiff's confession, as it is "hard to see how officials whose conduct ultimately impaired a citizen's Fifth Amendment rights could nonetheless escape civil liability merely because a different state official put the statements into evidence at trial. (4/11/05) OH 1 1d 3 7 64wt __ F3d __ 16 05 McKinley v. City of Mansfield (6th).

Though It Satisfied EEOC's Four-Fifths Rule, Written Promotion Test Cutoff Score Violated Title VII
When city's written test cut-off score for promotion to police lieutenant violated EEOC's four-fifths rule in that not enough minority candidates in proportion to non-minority candidates passed the test, city, without further validation, lowered the cut-off by sufficient points that fifty-one of those who passed are white and forty-seven are African-American. Even that didn't suffice to avoid an unconstitutionally disparate impact, as, despite compliance with the four-fifths rule, "other statistical analyses--including the T-test and the Z-test--did show an adverse impact." City's business justification defense fails because "(to validate a cutoff score, the inference must be drawn that the cutoff score measures minimal qualifications." (4/11/05) TN 1 1d 8 A R__ F3d __ 16 05, Isabel v. City of Memphis (6th)

U.S. Supreme Court Finds That ADEA Supports A Remedy For Disparate-Impact
To bring starting salaries of police officers up to the regional average, city adopts pay increases for all officers; but, as newer officers' raises are higher as a percentage of pay than those for more senior officers who tend to be older, the older officers sue under the ADEA. A plurality (a fifth Justice would rely on the EEOC's rule to the same effect) opine that "the ADEA does authorize recovery in 'disparate-impact' cases comparable to Griggs" (US 1971) that found Title VII not to require a showing of discriminatory intent. However, the "scope of disparate-impact liability under ADEA is narrower than under Title VII" in that ADEA includes an exception for "reasonable factors other than age" and wasn't expanded by the Civil Rights Act of 1991 (so that Wards Cove's (US 1989) narrow interpretation applies). Plaintiffs' suit falls short, as city's "reliance on seniority and rank is unquestionably reasonable [.]" (3/30/05) US 1 1d 9 O __ U.S. __ 14 05 Smith v. City of Jackson, Mississippi

Transsexual Police Officer Prevails In Failure To Promote Suit
Pre-operative male-to-female transsexual police officer, who lives as a woman off duty but comes to work as a man, is scored low for "command presence" and fails the probationary period required to become a sergeant. He sues and is entitled to $320,511 in damages and $527,888 in attorney fees. Plaintiff's performance ratings as a probationary sergeant "though low, surpassed those of at least one other [officer] who passed probation [.]" Sex stereotyping based on a person's gender non-conforming behavior is impermissible, and judge properly instructed jury that plaintiff's failure to conform to sexual stereotypes supports liability if it was "a" motivating factor. (3/22/05) OH 1 1d 7 8 G __ F3d __ 13 05 Barnes v. City of Cincinnati (6th)

Title IX Extends To Retaliation Claims
Teacher loses his position as girls' basketball coach, and therefore his supplemental coaching pay, after he complains about sex discrimination in high school's athletic program. "We consider here whether the private right of action implied by Title IX encompasses claims of retaliation. We hold that it does where the funding recipient retaliates against an individual because he has complained about sex discrimination." It doesn't matter that Title IX doesn't expressly mention retaliation, because "where the retaliation occurs because the complainant speaks out about sex discrimination, the 'on the basis of sex' requirement is satisfied." (3/29/05) US 4 5 G __ U.S. __ 13 05 Jackson v. Birmingham Board of Education

Mental Health Seizure May Have Violated Fourth Amendment:
To protect his neighbors' crops, retired farmer, 77, as is his habit, goes out to shoot groundhogs, stationing his folding chair on the elevated railroad grade. Passerby on rural road 250 yards away incorrectly perceives him to be sitting on the tracks, his legs tied to the rails, and calls sheriff to report a potential suicide. The farmer complies with deputies' order to drop his rifle, and walks calmly towards them, only to be handcuffed, forced to the ground, and to suffer cardiac arrest. Partially recovered, he sues under sec. l983 for the "seizure" and states claim. "Absent suspected criminal activity, in this circuit a law enforcement official may not physically restrain an individual merely to assess his mental health." Rather, "in the context of a mental health seizure an officer must have probable cause to believe that the person seized poses a danger to himself or others." Even if the Terry stop exception were to apply to mental health seizures, the force used by the deputies elevated their seizure of the farmer from a mere investigatory stop to an arrest." And the deputies lack qualified immunity. But it hasn't been shown that sheriff failed properly to train them. (2/25/05) OH 1 1a 1b__ F3d __ 9 05 Fisher v. Harden (6th).

ADA Supports Cause Of Action For City's Violation Of Accessibility Regulations
Asserting that city has failed to install proper curb cuts and that its sidewalks are uneven, lady chooses to ride her wheelchair in the street, at times with her daughter in her lap. Charged with child endangerment, she is acquitted and sues under the ADA. She has a private cause of action to seek relief based on the ADA's accessibility regulations, but "the police did not stop [her] because of her disability, but rather stopped her in response to citizen complaints about her being in the roadway." And, as the city's duty under the ADA to install handicapped-accessible sidewalks and to train its employees about the ADA affects all disabled persons, and not just plaintiff, she has failed to show intentional discrimination against her specifically. Nor is she entitled to attorney fees. (2/18/05) OH 1 60c H__ F3d __ 8 05 Dillery v. City of Sandusky (6th).

Title VII Standard For Inference Of Discrimination Is Explained
High school secretarial employee complains under Title VII that she was denied assistant athletic director post because of her gender and that, after she filed with the EEOC, she was denied a raise. However, in order to recover it isn't sufficient to show that the reason given by the employer for its actions was false. An inference of discrimination "is permissible only if the evidence also supports a finding that [school system] intentionally discriminated against [employee] on the basis of a prohibited criterion [.]" (2/10/05) MI 4 8 G__ F3d __ 7 05 Williams v. Eau Claire Public Schools (6th)

Conditioning Benefits On Agreement To Forego Constitutional Rights Violates Unconstitutional Conditions Doctrine
Microbrewery states sec. l983 unconstitutional conditions claim that city withheld regulatory approvals and imposed inordinate police surveillance to induce it to agree to close at 11:00 p.m., rather than at the 2:00 a.m. closing hour permitted by its state license. The owner's right to serve customers until 2:00 is a protected property interest; and, "under the unconstitutional conditions doctrine, 'a state actor cannot constitutionally condition the receipt of a benefit . . . on an agreement to refrain from exercising one's constitutional rights [.]'" And plaintiff has standing to challenge city's sign ordinance, though city merely delayed approval of name change on its sign, as it is "irrelevant that the city did not actually deny Goose Island's request to change its sign [.]" (2/10/05) MI 1 26 51 N D __ F3d __ 7 05 R.S.W.W., Inc. v. City of Keego Harbor (6th).

City Wasn't Shown To Have Custom Or Practice Of Condoning Excessive Force
Responding to neighbor's call that man and wife are shouting at each other, police officer comes to window and, hearing the yelling, sees him, a revolver in each hand, appear to lurch towards her as she attempts to unlock the door. The officer shoots him; and the question is whether city has an unwritten policy, practice, or custom of condoning the use of excessive force against potential suspects. Plaintiffs' expert's testimony as to the number of excessive force claims against the department doesn't establish liability, as he "had not examined the details of any of these suits beyond merely looking at the complaints." Nor does it affect result that the officer was not disciplined, there being no showing that "the [alleged] flaws in this particular investigation" reflected a pattern. (2/9/05) TN 1 1c 1dv 12 12ca __ F3d __ 7 05 Thomas v. City of Chattanooga (6th).

FROM IPMA-HR HR Bulletin

New OPM Director Named
On March 18, President Bush announced the appointment of Linda M. Springer to be Director of the Office of Personnel Management (OPM). Ms. Springer recently served as Controller and Head of the Office of Federal Financial Management in the Office of Management and Budget. Prior to joining the Administration, she was Senior Vice President and Controller of Provident Mutual. Earlier in her career, Ms. Springer served as Vice President and Product Manager for Penn Mutual Life Insurance Company. She received her bachelor's degree from Ursinus College. Dan Blair is Acting Director of OPM until Ms. Springer's appointment is confirmed by the Senate. OPM is overseeing the change in the personnel systems at the Departments of Defense and Homeland Security and is expected to propose government-wide regulations in the near future.

State and Local Issues

Michigan Domestic Partners
The Detroit Free Press reports that same-sex partners of public employees will no longer be eligible for health care and other benefits. The change came about because of a ballot initiative approved by voters last November. According to an opinion issued by the state's Attorney General, Mike Cox, the proposal, which defines marriage as between a man and a woman, means that states and localities can no longer offer domestic partner benefits.

Domestic partners currently receiving benefits will not be affected because the proposal is not retroactive. In addition, public employers may still allow employees to designate someone to receive benefits, as long as the benefits plan is set up that way. Employers are prohibited from treating same-sex domestic partners in the same manner as married partners.

New York - Domestic partner benefits was also the topic of a recent court case. The New York State Appellate Division, First Department recently ruled that a New York City Council law requiring city contractors and vendors to offer benefits to domestic partners is invalid. Council of the City of New York v. Bloomberg, N.Y. App. Div. No. 5595, March 15, 2005.

NEW YORK CITY - The city and municipal unions reached agreement April 6 to reduce the city's cost of providing a special prescription drug benefit known as PICA (psychotropics, injectables, chemotherapy, and asthma). The cost of the four drugs has risen 15 to 20 percent per year. The agreement takes effect July 1 and shifts the costs of psychotropic and asthma drugs from the city to union welfare funds or health plan optional riders. The central PICA program will continue to fund injectable drugs and chemotherapy drugs. The agreement also includes a slight increase in retail co-payments for the injectable/chemotherapy drugs. In addition, the city plans to create a labor-management committee to explore ways to reduce costs.

San Diego, California - The City of San Diego's pension system and 13-member board are under a criminal investigation by the District Attorney for a possible violation of the conflict of interest laws. The District Attorney is investigating a 2002 vote where the trustees endorsed letting the city under fund the retirement system. The San Diego City Employees Retirement System has a deficit of $1.37 billion and will require an expensive bailout. Source: SignOnSanDiego.Com by the Union Tribune, March 23.

Maine: Discrimination based on sexual orientation in housing, employment, public accommodation, credit and education is now illegal in the state of Maine. Governor John Baldacci (D) signed into law a bill that adds sexual orientation to the list of prohibited criteria for decision-making. Baldacci signed the bill March 31, 2005.

Virginia: Employers in the state may now offer group health plans that include coverage for domestic partners and adult children as long as agreed to by the insurer and employer. The new law becomes effective July 1 and is a significant change from the existing law, which allows only self-insured employers to extend coverage beyond employees, their spouses and dependent children. Governor Mark Warner (D) signed the bill on March 28.

NEW JERSEY - The New Jersey state's minimum wage will rise from $5.15 per hour (the federal rate) to $7.15 per hour in two $1 increments. Beginning October 1, 2005 the minimum wage will be $6.15 per hour and it will jump to $7.15 per hour on Oct. 1, 2006. According to a "Client Alert" from the law firm Proskauer Rose LLP, New Jersey now joins 13 other states and the District of Columbia that have minimum wages above the federal level.

Survey Reveals that the "Lunch Hour" is "Disappearing"
According to a recent Steelcase Workplace Index Survey, a semiannual survey that measures trends in workplaces, 55 percent of American office workers said they do things other than eat lunch during their lunch hour in a typical workweek, and 40 percent of those say they have exchanged their traditional lunch hour for some extra time to catch up on work.

On average, office workers take just 36 minutes for lunch each day, and 14 percent do not taking any time for lunch in an average workweek, according to the Steelcase Workplace Index. Northeastern office workers and those with a household income of $50,000 or more are most inclined to skip lunch altogether. The survey also showed that 15 percent of men and 14 percent of women are inclined to skip their lunches entirely.

The Steelcase Workplace Index revealed that Americans try to accomplish a great deal during their lunch hour, as they selected one or more activities accomplished during this time period. Aside from eating, socializing with friends (53 percent), running errands (44 percent), having a working lunch with colleagues (38 percent) and reading (37 percent) are among the most common activities, followed by 28 percent who call friends or family members on the telephone, 27 percent who go shopping, 14 percent who exercise, nine percent who use the time to go to the doctor, six percent who check in on the kids in daycare, and one percent who use that time to go on job interviews.

The Steelcase Workplace Index Survey was commissioned by Steelcase Inc. and conducted by Bruskin Goldring Research of New Jersey, among 1,000 American men and women, 18 years of age or older.

According to the Steelcase Workplace Index, 47 percent (or 298 respondents) of the employed Americans surveyed (employed Americans comprised 630 of the survey's 1,000 respondents) work in an office setting.

Steelcase helps people have a better work experience by providing products, services and insights into the ways people work. The company designs and manufactures architecture, furniture and technology products. Founded in 1912 and headquartered in Grand Rapids, Mich., Steelcase (NYSE: SCS) serves customers through a network of more than 900 independent dealers and approximately 14,000 employees worldwide. Fiscal 2004 revenue was $2.3 billion. Learn more at http://www.steelcase.com.

Employers Doing Better Job of Controlling Health Care Costs
A recent study by Watson Wyatt and the National Business Group on Health reveals that employers are doing a better job controlling health care costs this year, with the rate of increases down from 12 percent in 2004 to 10 percent in 2005.

"Employers are realizing that to get to the root of the health care cost problem, they must take a more active role in managing the health of their employees," says Helen Darling, president of the National Business Group on Health. "Programs that focus on managing specific diseases and help workers make lifestyle behavior changes aimed at weight management, exercise and smoking cessation can go a long way toward slowing rising costs over the long term."

Nearly seven of ten respondents (69 percent) are using disease management programs through a health plan this year, a 50 percent increase over last year. Similarly, the number of employers adopting lifestyle behavior change through a health plan doubled to 40 percent this year. Additionally, 32 percent offer obesity reduction programs, compared with just 14 percent in 2004. The survey found that employers that are doing the best job of controlling health care cost trends have a much greater focus on health management than those with higher cost increases. They also tend to set their health care strategy on quantitative analysis and rely on evidence to confirm their approach to health care benefits.

The survey also found that 8 percent of employers now offer health savings accounts (HSAs), and another 18 percent plan to offer them in 2006. Additionally, 47 percent are considering offering the accounts. Established in December 2003 as part of Medicare reform legislation, HSAs allow enrollees to carry unused account balances forward from one year to the next and retain ownership of the funds after they leave their place of employment.

Half of Employers Do Not Have Policies on Employee Appearance - Survey
The latest national survey by the Employment Law Alliance (ELA) reveals a nation deeply divided over regulating appearance - from weight to clothing, hairstyles to body piercing - in the U.S. workplace. As the debate intensifies, more than half of those surveyed said their employers had no policy addressing employee personal appearance.

The "America At Work" poll questioned 1,000 Americans on their views on appearance-based discrimination as employer-employee disputes increase, and frequently spill over into the courts and government enforcement agencies. The rash of recent cases include an Atlantic City casino sued over a requirement that cocktail waitresses undergo weekly weigh ins; a challenge based on religious beliefs to a national superstore chain's prohibition on "visible facial or tongue jewelry (earrings excepted)"; and a $40 million settlement involving a national, trendy clothing retailer accused of appearance-based personnel practices.

Stephen J. Hirschfeld, Esquire, CEO of ELA and a partner in the San Francisco-based law firm of Curiale, Dellaverson, Hirschfeld, and Kraemer, said claims involving alleged appearance or personal-style discrimination are surging.

"On the surface this may look like another symptom of a litigious society, but it goes much deeper than that as employers and employees struggle over the authority of management to ensure customer satisfaction versus an employee's right to, for instance, sport a nose ring and a tongue stud while taking orders at the local fast-food restaurant," said Hirschfeld, head of the world's largest practice network of labor and employment attorneys.

Here are the major findings of the poll, which has a confidence interval of +/- 3.1%, and was conducted over a recent weekend by the Media, PA market research firm of Reed, Haldy, McIntosh & Associates of a representative national sample of the adult population.

39% said employers should have the right to deny employment to someone based on appearance, including weight, clothing, piercing, body art, or hair style. 33% said that in their own workplace workers who are physically attractive are more likely to be hired and promoted. 33% said workers who are unattractive, overweight, or generally look or dress unconventionally, should be given special government legal protection such as that given persons with disabilities. Of the 39% who said employers should have the right to deny employment based on looks, men outnumbered women 46% to 32%. And whites outnumbered non-whites 41% to 24%.

The workers were not only asked their opinion on this simmering issue, they were asked if they had any relevant personal experience. 16% said they had been the victims of appearance-based discrimination. Of those, 38% said the discrimination was based on their overall appearance while 31% said it was their weight, and 14% said it was a reaction to their hairstyle. 33% of those saying they had been discriminated against said it was for some other reason.

Hirschfeld said the poll found that supervisors are much more likely than non-supervisors to support a policy permitting companies to regulate personal appearance. The survey found that 47% of the supervisors surveyed said employers should have the right to deny employment based on looks, while 35% of the non-supervisors supported that position.

"The most surprising finding in the poll might be that roughly half the nation's employers have absolutely no policy or regulation that addresses this extraordinarily complex yet important issue in the American workplace," explained Hirschfeld. "While most of the employee claims in the past have involved direct-customer contact businesses like retailing, restaurants, and transportation, we're now seeing image or appearance-based claims in virtually every area. While the law is changing, employers have to focus on the requirements of the position when making personnel decisions if they are going to be able to successfully defend themselves against a discrimination claim."

The Employment Law Alliance is the worlds' largest integrated, global practice network and is comprised of premier, independent law firms distinguished for their practice in employment and labor law. There are member firms in every jurisdiction in the United States and major commercial centers throughout the world. For further information, including access to the survey charts and graphs, visit www.employmentlawalliance.com

Are Performance Appraisals Useless?
A recent study by People IQ, a developer of performance-based appraisal systems, found that only 13 percent of employees and managers and six percent of CEOs think their organization's performance appraisal is useful. "Performance appraisals are the elephant in the room for HR," says Mark Murphy, CEO of People IQ. "As they're currently designed, nobody thinks they add much value, but we're afraid to admit it."

The survey uncovered three main areas of dissatisfaction: they fail to distinguish between high and low performers, they are too cumbersome, and they do not provide relevant and meaningful feedback and rely too heavily on boilerplate language. People IQ surveyed 48,012 employees and CEOs in 126 organizations. The "Culture Scorecard" asked 85 questions on workforce issues, including performance appraisals.

Pharmacists are Exempt Employees - First Circuit Opinion
The United States Court of Appeals for the First Circuit (covering Maine, Massachusetts, New Hampshire, Rhode Island and Puerto Rico) ruled on March 9, 2005, that pharmacists are exempt employees under the Fair Labor Standards Act (FLSA). Eillim De Jesus-Rentas et al., v. Baxter Pharmacy Services Corporation, et al., Docket No. 03-2679.

The plaintiffs are a group of five pharmacists employed by Baxter Pharmacy Services Corp. (Baxter). Their primary duties include analyzing, approving, and filling prescription requests.

The pharmacists rotate through three duty stations - data entry, compounding and labeling. They determine whether or not a particular prescription is appropriate for a patient based on the medical profile, they supervise pharmacy technicians who prepare the drug compounds, and finally, they ensure that the final prescription is appropriately labeled and includes the required documentation.

The pharmacists use Baxter's Standard Operating Procedures (SOP) manual and argue that they are not exempt professional employees because they must rely on the manual. They argue that because of the manual, they do not exercise discretion and judgment as required by the FLSA.

The First Circuit disagreed, finding instead that the pharmacists must routinely exercise discretion and judgment and that the manual is only a guide. The pharmacists admit that they can and do depart from the SOPs when they believe a patient's health would be endangered. In addition, they review the SOPs and provide suggestions for modification and improvement.

*Note that this case predates the revised FLSA regulations issued by the Department of Labor in August 2004. However, this case is not obsolete because it analyzes issues that exist in both the old and revised regulations.

Health Costs to Rise for Public Sector Retirees, Says Report
It has been said that a job in the public sector has never been the road to riches. Working for a state or local government or in a public-school system has had its own perks: job security, a traditional pension and solid health-care coverage at work and in retirement.

However, that is soon to change says the latest Kiplinger's Retirement Report. According to the report, currently all 50 states provide health-care benefits to public sector retirees, in many cases picking up the bulk of premium costs. (Indiana and Nebraska limit their coverage to retirees under 65.) Most states require retirees to pay monthly premiums ranging from less than $100 for low-cost plans to $200 for the most generous plans. In 17 states, the government picks up the entire cost of supplemental coverage for retirees.

Medicare health-care coverage for public-sector retirees has been relatively stable over the past 12 years or so, which is in sharp contrast with private-sector retirees, who have gone through the wringer, watching their benefits slowly erode or even get eliminated, the report states.

Next year, two accounting-rule changes will begin to apply to 87,000 public employers: the same rule changes that, along with rising health-care costs, have propelled the benefit cutbacks in the private sector. The new rules essentially will require public employers to account for the cost of future retiree health-care benefits today. The changes will be phased in over three years. State and local governments, school districts, public hospitals and other systems will face significant unfunded liabilities as they begin calculating the cost of providing the benefits on an accrual basis.

According to Frederick Nesbitt, executive director of the National Conference on Public Employee Retirement Systems, "We have no reason to believe the experience in the public sector won't be exactly the same as you saw in the private sector. Many companies also set annual limits on what they would pay per retiree."

The article further discusses some of the specific ramifications for public-sector retirees and examines a possible long-term solution to this problem.

To read the full article, link to http://www.keepmedia.com/pubs/KiplingersRetirementReport/2005/03/01/769458

Critical Elements of a Performance Management System
Research from the Gallup Organization reveals that most organizations are still struggling with the challenge of keeping employees engaged at work. According to the Gallup survey of employee engagement, 70% of U.S. employees are not engaged at work. Also, ironically, the solutions currently being installed within many organizations - such as competency-based selection, competency-based performance appraisal, competency-based manager development, and gap-driven training needs analysis, all feeding into an integrated performance management IT platform - appears to be making matters worse. According to the 700,000-plus employees Gallup recently interviewed, the longer employees stay with an organization, the less engaged they become.

Why are employers so ineffective at engaging our people? And why, despite increasingly complex human resource systems, does the problem get worse the longer a person stays? Asked more positively: What can employers do to build a working environment that, over the course of an employee's tenure, creates higher levels of per-person productivity, customer service, employee retention, and safety and, underpinning it all, higher levels of employee engagement?

This article from the Gallup Management Journal attempts to answer these questions. Link to http://gmj.gallup.com/content/default.asp?ci=442

Recruiting Older Workers
AARP, the nation's largest organization for seniors, recently launched an online effort to help employers recruit older employees. The system includes a dedicated web page listing "Featured Employers;" extensive employment information and links to training opportunities for mature job seekers; and AARP's Employer Resource Center, with resources for human resource professionals.

Supreme Court Decides Two Important Public Sector Cases
The Supreme Court issued opinions in two public sector cases this week. The Court in recent years has scaled back several employment laws, including the application of those laws to the states. However, this pair of decisions expands the scope of the laws.

In the first opinion, issued on March 29, the Court held that a coach could bring a lawsuit under Title IX for retaliation. The coach was fired after complaining that the girls' basketball team was not receiving the same access to facilities, equipment and funding as the boys teams. Roderick Jackson, v. Birmingham Board of Education, Docket No. 02-1672.

Title IX prohibits sex discrimination by recipients of federal education funding. Writing for the 5-4 majority, Justice O'Connor said, "Reporting incidents of discrimination is integral to Title IX enforcement and would be discouraged if retaliation against those who report went unpublished. Indeed, if retaliation were not prohibited, Title IX's enforcement scheme would unravel."

Justice Thomas wrote the dissenting opinion, arguing that retaliatory conduct is not discrimination on the basis of sex and that the majority opinion is contrary to the "plain terms" of Title IX.

The second opinion, issued on March 30, expressly allows disparate impact suits in age discrimination cases. Four separate opinions were written, showing how divided the Court was on this issue. Azel P. Smith et al. v. City of Jackson, Mississippi et al., Docket No. 03-1160.

This is the second time the Court has had this issue. In 2001 the Court accepted a case for review but took the unusual step of dismissing it after oral arguments were heard in March 2002. In this case, the Court considered whether or not the Age Discrimination in Employment Act (ADEA) allows workers to sue when an otherwise neutral policy has a negative impact on a group of older workers.

These disparate impact suits are recognized in discrimination claims based on race, sex, national origin, color and religion under Title VII, but courts have been divided on whether or not to apply the principle to age discrimination suits.

In this case, police and public safety officers for the City of Jackson, Mississippi allege that a salary increase they received in 1999 violated the ADEA because it unfairly gave larger increase to younger workers.

The City of Jackson adopted a pay plan in 1998 that gave raises to all city employees. In 1999, it was amended to bring the starting salary of police officers up to the regional average. Police officers with less than five years of tenure received comparatively higher raises than those with more seniority. Most officers over the age of 40 had more than five years of tenure and received proportionately smaller raises.

The older workers sued arguing that the city's pay plan violated the ADEA. The city countered that disparate impact suits are not permitted under the ADEA and even if they are, that they had a legitimate, non-discriminatory reason for implementing the plan.

The Supreme Court split 5-3 (Chief Justice Rehnquist did not participate in the decision) on the issue of whether or not disparate impact suits are allowed under the ADEA with the majority finding that they are. However, the five justices agreed with the dissenters that in this case, the officers' did not have a disparate impact claim.

The ADEA allows employers to make decisions that have a negative impact on older workers as long as it based on reasonable factors other than age (RFOA). Justice Stevens, writing for the majority said, "Reliance on seniority and rank is unquestionably reasonable given the City's goal of raising employees' salaries to match those in surrounding communities."

EEOC Appeals Retiree Benefits Order
On March 30, the Federal District Court in Philadelphia issued an opinion that prohibits the Equal Employment Opportunity Commission (EEOC) from moving forward with the retiree health benefits rule. The rule allows employers to stop providing health benefits to retirees when they become eligible for Medicare without violating the Age Discrimination in Employment Act (ADEA).

Most business groups as well as several unions, including the major teachers' unions support the rule because many employers may be forced to stop providing benefits without the rule.

Cari Dominguez, Chair of the EEOC said the agency has asked the Justice Department to appeal the ruling to the Third Circuit Court of Appeals. Dominguez is confident both of the legality of the rule and the agency's ultimate authority to implement it.

Speaking on the benefits of the rule, Dominguez said that it will "help safeguard existing and future health benefits for America's retirees by ensuring that the ADEA does not impede employers' ability to offer retiree health plans." Employers are not required to offer retirees (or employees) any health benefits.

Public Sector Employees Stay in Jobs Longer than Private Sector Employees
The headline is no surprise; after all job security has been touted as benefit of working for the government for many years. However the recently released study by the Employee Benefit Research Institute (EBRI) does have some surprises. One is that the career job - working for one employer for the entire work life - not only does not exist, but it never did.

In 1963, the job tenure for males was 14.7 years, in 2004 it was 10 years. Both are far short of a full career. The median tenure for all wage and salary workers over age 25 is virtually unchanged from 1983 to 2004 - down slightly from 5 years to 4.9 years.

The median tenure for males decreased slightly during the same time period, from 5.9 years to 5.1 years and increased slightly for females - from 4.2 to 4.7 years. In terms of age, the largest increase in tenure was among females ages 55-64 whose tenure increased from 7.8 years to 9.3 years.

In terms of public versus private sector, public sector workers increased from 6 years in 1983 to 7 years in 2004. In the private sector had a smaller increase from 3.6 years to 3.9 years during the same time period. The EBRI report notes that the increase in public sector tenure is about 80 percent higher than in the private sector.

EBRI concludes the study by noting that Americans have always changed jobs and probably always will and states that, "a minority of American workers are likely to receive a significant benefit from a defined benefit pension, as was the case in the past."

CSG Launches Healthy States Initiative
In a year when flu shot shortages plagued state public health agencies and obesity became a front-burner issue in state capitals, the Council for State Governments launched the Web site: healthystates.csg.org. The site contains critical information and resources, notices about upcoming Web conferences and events.

Overwork In America Study Released
A study on Overwork in America: When the Way We Work Becomes Too Much, which was released by the Families and Work Institute, found that one in three American employees are chronically overworked, while 54% were overwhelmed by work at some point in the past month. There were more than 1,000 employees who participated in the study. Employees with greater family responsibilities were no more likely to be overworked than those without these responsibilities, with the exception of elder care.

The study examined vacations in relation to reducing work stress. While 79% of respondent employees were provided with vacation, 36% said they were not planning to take all of their available vacation time. On average, American workers take 14.6 vacation days with 37% taking fewer than seven days. Only 14% of employees take vacation of two weeks or more.

"Perhaps the most important finding from the study related to vacations is that the more one works during vacations, the more overworked one is. Although one might hypothesize that employees who work during vacations are doing themselves a favor in avoiding a pile-up of work when they return," says Terry Bond, Vice President of Families and Work Institute and an author of the study, "the opposite seems to be true. Sometimes being truly away from work helps employees return less overwhelmed and more able to engage energetically in work."

The study authors believe that employees who are more overworked are more likely to make mistakes at work, to be angry with their employers for expecting them to do so much and to resent coworkers who don't work as hard as they do. In addition, nearly half of employees who feel overworked report that their health is poor. For example, only 8 percent of employees who are not overworked experience symptoms of clinical depression compared with 21 percent of those who are highly overworked. The Families and Work Institute is a nonprofit center for research that provides data to assist decision-making on the changing workforce, changing family, and changing community. A copy of the study is available from the Families and Work Institute, www.familiesandwork.org

Matching 401(k) Contributions A Great Incentive For Savings
The Employee Benefit Research Institute (EBRI) released the 15th Annual Retirement Confidence Survey on April 5, revealing the best way to get employees to save for retirement is to "show them the money."

Nearly three-fourths of workers said they would be much more likely or somewhat more likely to participate in a savings plan at work if there were an employer matching contribution of up to 5 percent.

Less than half of workers not contributing to their employer's plan backed two other options. Forty-nine percent said they would be more likely to contribute to their employer's plan if it included a pre-set mix of retirement options such as mutual funds grouped into categories of conservative, moderate and aggressive investments. Thirty-five percent said they would be more likely to participate if a professional financial manager made investment decisions for them based on a questionnaire.

Dallas Salisbury, EBRI president said, "These results confirm that workers are well aware of 401(k) type plans and have some definite ideas about what measures could be undertaken to make these plans even more appealing and ultimately increase retirement savings."

The EBRI retirement confidence survey was developed in 1991 to measure attitudes and behaviors relating to retirement. There is a core set of questions asked annually that allow trends to be tracked over time.

In terms of the core questions, the survey found that once again, Americans have a false sense of confidence of their retirement security. Nearly half - forty two percent - of respondents said they have not even tried to figure out how much they will need for retirement.

In contrast, nearly two-thirds of Americans believe they will have sufficient savings for retirement, although many of those profess to having guessed at how much they will actually need.

In addition fifty-five percent of workers said they were behind in the scheduled savings because of the cost of paying for every day expenses, child-rearing expenses and medical costs. Thirty-seven percent of respondents report being on track in saving for retirement.

"Eliminating consumer debt and curbing spending is a must if many workers are to save adequately for a comfortable retirement, " said Mathew Greenwald, president of Greenwald & Associates. "Six in ten workers report their level of debt is a problem, and half report they carry credit card debt."

For more information about the survey, visit EBRI at: http://www.ebri.org. To learn more about retirement savings and to use online calculators go to: http://www.ChoosetoSave.org.

President Proposes Savings Options
President Bush proposed three savings options last month; the proposals are part of the Administration's 2006 budget and have been part of the budget for the last two fiscal years. The savings proposals include lifetime savings accounts (LSAs), retirement savings accounts (RSAs) and Employer Retirement Savings Accounts (ERSAs).

LSAs could be used for any purpose and the only tax advantage is that earnings on the account would not be taxed. The savings can be used at any time for any purpose without penalty. The maximum annual contribution would be $5,000 and would increase with inflation.

RSAs are like LSAs except that individuals can use the money at retirement without paying additional taxes. There is no requirement that the money be withdrawn by a certain age. ERSAs would be like 401(k) plans with pre-tax contributions and all the benefits of the other two types of plans.

These plans would greatly simplify the tax status of retirement plans. IPMA-HR is working with the Public Pension Network to ensure that Congress considers public sector retirement plans when they debate the Administration's proposal.

U.S. Chamber of Commerce Says Federal Court Decision on Retiree Health Benefits Hurts Older Workers
WASHINGTON, D.C.-The United States Chamber of Commerce on April 1 expressed disappointment over a federal court ruling prohibiting the Equal Employment Opportunity Commission from issuing a regulation that would have encouraged employers to offer health care benefits to retired workers who are not yet eligible for Medicare.

"This decision is going to worsen the problem of insuring America's retirees," said Robert Costagliola, the Chamber's labor and employment counsel. "This is a train wreck waiting to happen as it will give employers a disincentive to offer retiree health benefits."

The court decision stems from an AARP-initiated lawsuit against the EEOC in which AARP was seeking to block a regulation that would have allowed employers to coordinate retiree health benefits with Medicare coverage.

The Chamber, along with a group of other associations including labor unions, filed a friend-of-the-court brief in the case. The brief supports the EEOC's position and points out that without this EEOC regulation, it will be more difficult for employers to find affordable methods for offering health coverage to retirees not yet eligible for Medicare.

"We supported the EEOC in its attempt to encourage employers to offer health benefits for workers who retire before age 65," Costagliola added. "This decision is short-sighted and could result in even greater numbers of retirees going without health coverage."

The U.S. Chamber of Commerce is the world's largest business federation, representing more than three million businesses of every size, sector, and region. For more information, go to http://www.uschamber.com

Public Sector Pay & Benefits Much Higher than in Private Sector
On average, public employees earn $34.72 per hour worked compared to $23.76 for private-sector workers, according to a report by the Employee Benefit Research Institute (EBRI) published in their April newsletter. The cost of state and local government workers' pay is 40 percent higher than for private-sector workers.

State and local government workers are concentrated in occupations such as teacher, police officer and firefighter. These occupations require higher levels of education or involve greater physical risk or training and tend to be more highly paid, according to the study. In the private sector, the largest percentage of workers are in sales and office occupations, requiring less education and less risk, and tend to be paid less.

"Because of good retirement and health programs, governments have been able to attract a more stable workforce," notes Dallas Salisbury, president and CEO of EBRI. And, the good benefits are another factor that contribute to the higher costs of public employees. Full-time state and local government employees participate in both health insurance and retirement programs at far higher rates than their counterparts in the private sector.

The report found that more than half (54 percent) of state and local government employees work in the education sector. Teachers had the highest total compensation costs among state and local government employees at $47.35 per hour worked.

In the private sector, the largest concentration of workers (47 percent) was in the services industry followed by the trade, transportation and utilities industry with 23 percent. Service workers earned between $10.64 per hour to $27.17 per hour and those in the trade, transportation and utilities industry averaged $20.05.

The report also cited great cost disparity between public and private workers in health and retirement benefits. For health insurance, the cost for public employees was $3.49 per hour worked for health insurance but only $1.56 per hour worked for private employees. Retirement health benefits cost public employers $2.23 per hour worked compared to $0.85 for private employers.

The report is available on EBRI's Web site, http://www.ebri.org. The U.S. Census Bureau based the study on figures from the Bureau of Labor Statistics and the 2004 Current Population Survey.

The New York Times Article Addresses Rate of Inflation vs. Pay Increases
It is no secret that the rate of inflation is now outpacing pay increases for most workers in the U.S., and "Falling Fortunes of the Wage Earner," by Steven Greenhouse, which appeared in the Apr. 12 issue of The New York Times, addresses this issue.

Greenhouse writes that the "unexpected reversal…has set off a vigorous debate among economists over whether the decline is just a temporary dip or portends a deeper shift that may cause the pay of average Americans to lag for years to come."

He notes the Bureau of Labor Statistics' report of a 0.5 percent drop last year after inflation in its measure of nonsupervisory private-sector workers, which covers 80 percent of the labor force, and the employment cost index, which dropped 0.9 percent, that includes supervisors, managers and most government workers.

"Since 2001, when the recovery began, productivity growth has averaged 4.1 percent a year; overall compensation-wages and benefits-has risen about one-third as fast, by 1.5 percent a year on average," Greenhouse writes. "By contrast, over the previous seven business cycles, productivity rose by 2.5 percent a year on average while compensation rose roughly three-fourths as fast, by 1.8 percent a year."

To read the full text of the article, go to http://www.nytimes.com.

Chicago Firefighter Exam Discriminatory
A federal district court in Illinois ruled that an entry-level firefighter exam has an adverse impact on African American firefighters and violates Title VII of the Civil Rights Act of 1964. The City of Chicago concedes that the exam has an adverse impact but argued that it was justified by administrative convenience and is a valid measure of the skills needed to be a firefighter. (Arthur Lewis Jr., et al. v. City of Chicago, Docket No. 98 C 5596.)

The firefighter exam was administered in 1995 and has been used since then to select entry-level firefighters for the Chicago Fire Department (CFD). The exam was developed by the consulting firm Human Performance Systems, Inc. (HPSI), and Dr. James Outtz, an industrial organizational psychologist.

The exam consists of two parts-a pencil and paper exam and a video demonstration section. The written portion was designed to measure an applicant's ability to comprehend written information and the video portion was designed to measure an applicant's ability to understand oral instructions, take notes, and to learn from and understand based on a demonstration.

The city set the passing rate at 65 and designated those who received a score of 89 or higher "well qualified." Of the 26,000 people who took the exam, 37 percent were African American, and 45 percent were white. Only 2.2 percent of African Americans scored an 89 or higher compared to 12.6 percent of white test takers. However, 72.3 percent of African Americans passed the exam and 93.45 percent of whites passed with scores of 65 or better. The district court conducted a bench trial and found that the city's decision to set the cutoff score at 89 percent was not consistent with business necessity.

The court found that: (1) the test may not be a reliable measure of the four cognitive abilities it was intended to measure; (2) the 89 cutoff score was statistically meaningless; (3) even if the test measured what it was supposed to measure, it could not distinguish between those who were qualified for the position of firefighter and those who were not; and (4) less discriminatory, equally convenient selection strategies were available, for instance the city could have randomly selected candidates who passed the test with a score of 65 or better and thereby lessened the adverse impact of the test.

The case has been posted to the IPMA Assessment Council Web site at: http://www.ipmaac.org.

FMLA Regulations Uncertain
The Department of Labor is expected to issue proposed Family and Medical Leave Act (FMLA) rules this spring but the scope and timing of the regulations remain uncertain. Secretary of Labor Elaine Chao testified before a House Subcommittee on March 17, confirming that the department is working on regulations but offering no details.

In 2002, the U.S. Supreme Court issued an opinion in Ragsdale v. Wolverine Worldwide, Inc. (535 U.S. 81), invalidating a Labor Department rule that said leave not designated as FMLA-qualifying by an employer did not apply to the 12 weeks of leave allowed under the law. The Court reasoned that the FMLA entitles an employee to no more than 12 weeks of leave regardless of whether the time was designated FMLA-qualifying or not. The Labor Department is expected, at a minimum, to revise the regulations to reflect the U.S. Supreme Court's opinion.

On April 12, more than 100 members of the House of Representatives wrote to Secretary Chao, urging her not to make any major changes to the FMLA. U.S. Representatives Rosa L. DeLauro (Conn.-3) and George Miller (CA-7), co-chairs of the Democratic Steering and Policy Committee, led the effort.

The letter opened, "We the undersigned are writing on behalf of millions of American families who have benefited from the Family and Medical Leave Act (FMLA) and the millions more who will benefit in the years to come. We urge you not to make any regulatory changes that would undercut the critical protections it provides to working women and men and their families."

On the other side of the issue are IPMA-HR and business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers, who belong to a coalition led by the Society for Human Resource Management (SHRM).

IPMA-HR and others have been urging the Department of Labor to address problems in the FMLA for many years. For instance, a broadly written opinion letter in 1996 said that in certain cases a headache or cold could qualify for FMLA leave. This interpretation is so broad that it is difficult for HR to determine when a legitimate need for leave exists.

Cost of State Employee Benefits Rise
State employers continue to experience rising costs in providing healthcare benefits to retirees and employees according to the 2005 State Employee Benefits Survey published by Workplace Economics, Inc. As of January 1, 2005, the total premium paid by states for active employees was $417/month for individual coverage and $937/month for family coverage.

Only 13 states pay the full costs for individual coverage and four states pay for both individual and family coverage. All 50 states currently provide health benefits for retirees up to the age of 65, and 48 states provide coverage for retirees 65 and over. Twelve states pay the full cost of coverage for retirees under age 65, while 17 states pay the full premium for Medicare eligible retirees over the age of 65.

Other findings of the survey include:

  • All 50 states pay employees for unused annual leave at retirement or termination, but eight states limit the number of days that can be cashed out;
  • Only 10 states compensate employees for unused sick leave upon termination and they usually limit the amount of time that can be cased out.
  • All 50 states offer deferred compensation plans, and 12 states match a portion of the employee's contribution.
  • Forty-three states now offer pre-tax flexible spending accounts.

The full survey includes comprehensive information on state employee benefits including holidays, parental leave, life insurance, travel, and work life assistance, among others. The survey is available from Workplace Economics, Inc., http://www.workplace-economics.com-- (202) 223-9191. Workplace Economics Inc. is a Washington, D.C.-based economics-consulting firm.

LEGISLATIVE UPDATE

Mandatory Collective Bargaining Bill Introduced in House
Last week we reported that Senator Judd Gregg (R-NH) had reintroduced the "Public Safety Employer Employee Cooperation Act," S. 513. This week, Representative Dale Kildee (D-MI) has reintroduced the companion bill on the House side, H.R. 1249. The Senate bill currently has 13 cosponsors and the House bill has 64.

This bill is top priority for the International Association of Fire Fighters and it has been introduced in every session of Congress for at least the past eight years. Over the years, the legislation has garnered more and more support.

IPMA-HR is opposed to this bill because it would federalize collective bargaining; there is no evidence that federal control over the collective bargaining process would benefit citizens, governments or even police, fire, and EMS personnel. In addition, 34 states already have some form of collective bargaining for their public safety personnel, and the remaining states could pass such laws if their citizens support it.

Genetic Non-Discrimination Bill Introduced in House
Representative Judy Biggert (R-IL) introduced a bill, H.R. 1227, to prohibit employers from discriminating against individuals in hiring, firing or in the terms and conditions of employment based on genetic information. H.R. 1227 is the companion bill to S. 306, which was passed by the Senate in February. H.R. 1227 currently has 52 cosponsors.

The increased cost to employers as a result of litigation is one reason why Representative John Boehner (R-OH) has been reluctant to push the bill through his committee, the House Education and the Workforce Committee. The current situation is similar to the one during the prior session of Congress, where legislation easily passed the Senate but stalled in the House.

 
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